SUTTON PLACE GOURMET, HAY DAY MERGE

ROSEANNE HARPER

ROCKVILLE, Md. -- Sutton Place Gourmet here has merged with Hay Day Market, Westport, Conn., the first step in a fast-track expansion plan the company announced last fall.

Hay Day is an upscale specialty food retailer that, like Sutton Place, offers an extensive selection of fresh, prepared foods. It has five units, four of them in Connecticut and one in Scarsdale, N.Y., a high-income suburb of New York City. The stores average 8,500 square feet.

Sutton Place operates five large-format stores, 12,000 to 20,000 square feet, and two recently launched smaller-format stores called Sutton On the Run that target busy shoppers looking for a prepared meal to take home. All are located in the Washington metropolitan area. Sutton Place Gourmet President and Chief Executive Officer Mark Berey will be president and chief executive of the newly merged company. Hay Day Market owners, Sallie and Alex Van Rensselaer, will be senior officers and will have one seat on the board of directors.

Merger negotiations between the two companies began last fall and the deal, involving a stock exchange, was completed Jan. 26. "The combined strength of these two organizations creates tremendous and exciting opportunities to lead the industry in product development and new product introduction," Berey said.

By expanding Sutton Place's market geographically, the merger will push the company's gross sales to a projected $100 million for fiscal 1995, said Katherine Newell Smith, vice president of communications for Sutton Place. For 1994, Sutton Place grossed nearly $60 million, she said.

The Hay Day Market name will not be changed. "It's a proven and well-established name in their market area," Smith said. But Sutton Place's business systems will be instituted in the Hay Day Market stores, she added.

Sales of fresh, prepared foods have grown dramatically for Sutton Place over the last two years. At the time the company announced expansion plans last fall, Smith said sales of fresh, prepared foods had grown 15% to 20% for each of the last two years.

That category makes up approximately 20% of Hay Day Market's sales. For Sutton Place last year, fresh, prepared foods made up about 10% to 15% of sales, Smith said. Besides expanding Sutton's market, "we'll be better able to serve our customers and to offer even more interesting foods," she said.

"Both of these companies are leaders in upscale, fresh prepared take-away food." said John P. Roberts, executive director of the New York City-based National Association for the Specialty Food Trade. "This [the merger] is great cross-pollination. This isn't an investment take-over; this is creative partnership." Sutton Place, established in 1980, and 17-year-old Hay Day Market are privately owned.